1
00:00:00,100 --> 00:00:01,812
Big premium.

2
00:00:01,812 --> 00:00:03,525
Easy profit?

3
00:00:03,525 --> 00:00:05,412
Not so fast.

4
00:00:05,412 --> 00:00:09,975
Mira reaches for a large payment before an announcement.

5
00:00:09,975 --> 00:00:14,275
But the news is still inside a closed envelope.

6
00:00:14,275 --> 00:00:18,837
The payment may be large because the uncertainty is large.

7
00:00:18,837 --> 00:00:22,137
A surprise can move the market sharply.

8
00:00:22,137 --> 00:00:26,663
Today, we follow that risk through a made up example.

9
00:00:26,663 --> 00:00:31,300
These are invented prices, not a past event trade.

10
00:00:31,300 --> 00:00:35,575
We use sixty five units in our main example.

11
00:00:35,575 --> 00:00:40,225
That is an example quantity, not a current lot rule.

12
00:00:40,225 --> 00:00:42,438
Charges are extra.

13
00:00:42,438 --> 00:00:47,448
This lesson is for learning, not personal trading advice.

14
00:00:48,148 --> 00:00:51,923
A calendar tells Mira when news may arrive.

15
00:00:51,923 --> 00:00:56,035
It cannot tell her the result or the market reaction.

16
00:00:56,035 --> 00:01:00,023
The Budget can bring tax and spending details.

17
00:01:00,023 --> 00:01:06,348
An RBI announcement can include rates, forecasts, and other changes.

18
00:01:06,348 --> 00:01:11,798
Election counting can bring several updates, not just one result.

19
00:01:11,798 --> 00:01:16,885
Dev checks the official announcement, not a forwarded calendar.

20
00:01:16,885 --> 00:01:20,398
He checks the timing again before the session.

21
00:01:20,398 --> 00:01:22,923
The first headline arrives.

22
00:01:22,923 --> 00:01:25,785
Mira starts closing the envelope.

23
00:01:25,785 --> 00:01:29,273
But another important detail follows.

24
00:01:29,273 --> 00:01:32,260
The uncertainty has not ended.

25
00:01:32,260 --> 00:01:37,186
Some news arrives overnight, while our market is shut.

26
00:01:37,186 --> 00:01:41,304
Other news arrives without any warning at all.

27
00:01:42,004 --> 00:01:45,354
Mira sells a call and a put together.

28
00:01:45,354 --> 00:01:49,842
They have the same strike and expiry: a short straddle.

29
00:01:49,842 --> 00:01:53,879
Together, they bring three hundred rupees per unit.

30
00:01:53,879 --> 00:01:56,492
Now the announcement arrives.

31
00:01:56,492 --> 00:01:59,779
The index moves sharply upwards.

32
00:01:59,779 --> 00:02:03,604
There is still time left before expiry.

33
00:02:03,604 --> 00:02:06,342
Some uncertainty has gone.

34
00:02:06,342 --> 00:02:09,842
Traders call its sharp fall IV crush.

35
00:02:09,842 --> 00:02:14,129
On its own, that fall can help an option seller.

36
00:02:14,129 --> 00:02:18,829
But buying back this call now costs six hundred per unit.

37
00:02:18,829 --> 00:02:22,404
Buying back the put costs twenty per unit.

38
00:02:22,404 --> 00:02:24,604
Both payments count.

39
00:02:24,604 --> 00:02:28,516
Six hundred plus twenty is six hundred twenty.

40
00:02:28,516 --> 00:02:34,491
These are our example's usable closing prices, not expiry payments.

41
00:02:34,491 --> 00:02:38,352
The cheaper put cannot cancel the expensive call.

42
00:02:39,052 --> 00:02:42,840
Mira has the three hundred received at entry.

43
00:02:42,840 --> 00:02:47,552
Closing both options needs six hundred twenty per unit.

44
00:02:47,552 --> 00:02:51,552
She sends the whole three hundred towards that bill.

45
00:02:51,552 --> 00:02:56,102
She must add another three hundred twenty from her cash.

46
00:02:56,102 --> 00:03:01,502
Three hundred minus six hundred twenty is minus three hundred twenty.

47
00:03:01,502 --> 00:03:05,577
That is the loss for one unit, before charges.

48
00:03:05,577 --> 00:03:09,565
Now use sixty five units in this example.

49
00:03:09,565 --> 00:03:13,652
The total loss is twenty thousand eight hundred rupees.

50
00:03:13,652 --> 00:03:16,427
Charges make the loss larger.

51
00:03:16,427 --> 00:03:21,377
The upward move hurt more than the fall in uncertainty helped.

52
00:03:21,377 --> 00:03:26,090
We have not calculated an exact change in IV here.

53
00:03:26,090 --> 00:03:30,840
Actual entry and exit prices decide the cash result.

54
00:03:31,540 --> 00:03:35,552
Now take a separate, invented stop example.

55
00:03:35,552 --> 00:03:39,565
The option premium starts at one hundred rupees.

56
00:03:39,565 --> 00:03:43,678
Mira plans to buy it back at one hundred fifty.

57
00:03:43,678 --> 00:03:45,878
A surprise arrives.

58
00:03:45,878 --> 00:03:49,452
The next usable ask is two hundred sixty.

59
00:03:49,452 --> 00:03:52,965
That is the ask for the quantity she needs.

60
00:03:52,965 --> 00:03:57,202
There was no usable offer at her planned price.

61
00:03:57,202 --> 00:04:00,465
A stop trigger can send an order.

62
00:04:00,465 --> 00:04:04,415
It cannot promise a fill at one hundred fifty.

63
00:04:04,415 --> 00:04:08,728
A stop limit order may trigger and remain unfilled.

64
00:04:08,728 --> 00:04:13,552
An available market style exit may fill at a worse price.

65
00:04:13,552 --> 00:04:18,177
Available order types depend on the broker and contract.

66
00:04:18,177 --> 00:04:22,944
Mira checks actual fills, not just an order message.

67
00:04:23,644 --> 00:04:27,794
Dev brings in a bought protective option, or wing.

68
00:04:27,794 --> 00:04:32,494
For a proper spread, check the same index and expiry.

69
00:04:32,494 --> 00:04:37,282
Check the option types, strikes, and matching quantities too.

70
00:04:37,282 --> 00:04:41,431
Keep every required leg intact through settlement.

71
00:04:41,431 --> 00:04:45,694
Then the structure can limit its final settlement loss.

72
00:04:45,694 --> 00:04:49,594
That does not promise a cheap exit right now.

73
00:04:49,594 --> 00:04:53,707
The prices available for closing can still be poor.

74
00:04:53,707 --> 00:04:58,781
Closing may also need extra cash before margin is released.

75
00:04:58,781 --> 00:05:01,694
The bought wing's price changes too.

76
00:05:01,694 --> 00:05:07,144
So one short option's IV effect is not the whole spread's result.

77
00:05:07,144 --> 00:05:10,019
Removing the wing changes the risk.

78
00:05:10,019 --> 00:05:13,728
Charges and execution costs still count.

79
00:05:14,428 --> 00:05:20,591
Our beginner practice rule avoids new positions spanning major scheduled events.

80
00:05:20,591 --> 00:05:25,903
For existing practice positions, set a deadline before the event.

81
00:05:25,903 --> 00:05:30,153
Leave time to close all legs and verify fills.

82
00:05:30,153 --> 00:05:34,340
Check every expiry and the full loss plus costs.

83
00:05:34,340 --> 00:05:38,728
Check available cash, collateral, and possible gaps.

84
00:05:38,728 --> 00:05:43,941
Plan for failed orders, weak connectivity, and partial fills.

85
00:05:43,941 --> 00:05:49,241
After the event, fifteen minutes does not automatically mean safe.

86
00:05:49,241 --> 00:05:52,940
Check what information is still arriving.

87
00:05:52,940 --> 00:05:57,415
Check usable prices and quantities for every leg.

88
00:05:57,415 --> 00:06:01,241
A doubled premium is not proof of a bargain.

89
00:06:01,241 --> 00:06:05,815
Record actual fills, rejected orders, and costs.

90
00:06:05,815 --> 00:06:09,768
A lucky profit does not prove a reliable method.

91
00:06:10,468 --> 00:06:15,405
First, a large event premium can mean large uncertainty.

92
00:06:15,405 --> 00:06:18,230
The news can still surprise you.

93
00:06:18,230 --> 00:06:22,693
Second, count the whole position using usable prices.

94
00:06:22,693 --> 00:06:26,618
A fall in IV alone does not prove profit.

95
00:06:26,618 --> 00:06:31,443
Third, plan the exposure and the exit before the event.

96
00:06:31,443 --> 00:06:35,130
A stop cannot guarantee its price or a fill.

97
00:06:35,130 --> 00:06:40,118
Avoiding scheduled events still leaves unexpected news risk.

98
00:06:40,118 --> 00:06:45,568
Judge the plan and actual costs, not just a lucky outcome.

99
00:06:45,568 --> 00:06:49,830
Next, we compare weekly and monthly options.

100
00:06:49,830 --> 00:06:54,336
Which matters more: the label, or the days actually left?